Crude Oil Ends Above $101 On Egypt Concerns, Stockpile Decline

(RTTNews) - U.S. crude oil surged ahead of the $101-mark to end at a 13-month high Wednesday, after an Energy Information Administration weekly oil report showed crude stockpiles to have plunged more than expected for the week ended June 28. Oil prices found an added impetus with the Egypt imbroglio gathering strength, with rising concerns over supply disruption from the Middle East region as major oil shipping routes cut across the area of conflict. Oil added about $3.25 a barrel in the last two sessions.

Data from the Energy Information Administration showed U.S. crude oil inventories to have dived 10.30 million barrels and gasoline stocks shed 1.70 million barrels in the week ended June 28. Analysts expected crude oil inventories to dip only by 3 million barrels last week.

In Egypt, the army ultimatum on Monday for resolving the stand-off between President Mohammed Morsi and the opposition expired earlier today, with the military expected to step in any time now. The army had issued a 48-hour ultimatum to those supporting and opposing President Mohammed Morsi to resolve their political differences or have the military impose its own "roadmap" for returning peace and stability to the country. Millions of people in Egypt staged protest rallies across the country to expresses solidarity with the opposition against Morsi's rule.

In economic news from the U.S., activity in the service sector expanded in June, although the pace of growth unexpectedly slowed from a month ago, an report from the Institute for Supply Management showed. Nevertheless, in an upbeat sign for the labor market, first-time claims for U.S. unemployment benefits registered a modest decrease for the week ended June 29. Meanwhile, employment in the U.S. private sector rose more than anticipated in June, a report from payroll processor Automatic Data Processing, Inc. (ADP) showed Wednesday.

Light Sweet Crude Oil futures for August delivery, the most actively traded contract, soared $1.64 or 1.6 percent to close at $101.24 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for August delivery scaled a high of $102.18 a barrel intraday and a low of $99.59.

Yesterday, oil jumped to a 14-month high ahead of the weekly inventories data amid concerns over supply disruption from the Middle East and Africa. Oil output in Libya fell drastically as protesters shut several oilfields, even as tensions escalated in Egypt following anti-government demonstrations with the army threatening to intervene. Oil prices firmed further on some upbeat factory orders data from the U.S. even as the dollar strengthened, recording its highest close since May 2012.

Tuesday after the market hours, the American Petroleum Institute said U.S. crude oil inventories dropped 9.40 million barrels against analysts' expectations for a draw down of 2.3 million barrels. The API said gasoline inventories fell by 200,000 barrels last week.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 83.25 on Tuesday, down from 83.53 late Tuesday in North American trade. The dollar scaled a high of 83.72 intraday and a low of 83.09.

The euro traded higher against the dollar at $1.3000 on Wednesday, as compared to $1.2979 late Tuesday in North America. The euro scaled a high of $1.3030 intraday and a low of $1.2924.

In economic news from the U.S., the ADP said private sector employment increased by 188,000 jobs in June following a downwardly revised increase of 134,000 jobs in May. Economists had expected the private sector to add about 165,000 jobs compared to the addition of 135,000 jobs originally reported for the previous month.

A report from the U.S. Labor Department revealed that initial jobless claims dipped to 343,000, a decrease of 5,000 from the previous week's revised figure of 348,000. Economists expected jobless claims to edge down to 345,000 from the 346,000 originally reported for the previous week.

Economic activity in the U.S. service sector continued to expand in June, a report from the Institute for Supply Management showed Wednesday, although the pace of growth unexpectedly slowed compared to the previous month. The ISM non-manufacturing index dropped to 52.2 in June from 53.7 in May, with a reading above 50 indicating growth in the service sector. Economists expected the index at 54.5. With the unexpected decrease, the index is at its lowest level since hitting 51.7 in February of 2010.

Meanwhile, the U.S. Commerce Department said the trade deficit widened to $45.0 billion in May from a revised $40.1 billion in April. Economists expected the deficit to widen to $40.8 billion.

Elsewhere, eurozone private sector contraction eased in June, amid slower declines in employment and new orders, final results of a survey by Markit Economics showed. The composite output index, that measures both manufacturing and service sector activities, rose to 48.7 in June from 4.7.7 in May. The score was a tad below the flash estimate of 48.9, indicating a contraction steeper than estimated.

Meanwhile, retail sales in the euro area returned to growth in May after falling for three months in a row, and the rate of growth far exceeded economists' expectations, latest data showed. Retail sales increased 1 percent on a monthly basis in May, recovering from April's upwardly revised 0.2 percent decrease, statistical office Eurostat said. Economists had forecast sales to record a 0.3 percent growth following April's originally reported 0.5 percent contraction.

The Germany service sector returned to growth in June after shrinking in the previous two months, but the rate of growth was slower than initially estimated, final data from Markit Economics and BME showed. The seasonally adjusted purchasing managers' index for the service sector rose to a three-month high of 50.4 in June from 49.7 in May, moving above the no-change 50 mark - which separates growth from contraction - for the second successive month. The revised score was, however, notably lower than 51.3 estimated earlier.